On Sept. 13 the FOMC voted to implement open-ended QE3. On Sept. 12, the German Constitutional Court cleared the way for the establishment of the European Stability Mechanism. That will allow the European Central Bank to proceed with its plan for unlimited quantitative easing in the eurozone.

So happy days are here again! The central banks will do whatever it takes to avert another Lehman Moment. For now that trumps concerns about the U.S. Fiscal Cliff, the Euro Mess, and the China Landing. On the geopolitical front, there is a new worry, i.e., the “Arab Winter” - in addition to push coming to shove in both the Persian Gulf and the South China Sea. However, the bull has been charging to new high ground on performance-enhancing drugs provided by the Fed and the ECB. Instead of a meltdown, we have yet another melt-up relief rally:

(1) The S&P 500 jumped to 1,466, up 1.9% week-over-week and 16.1% year-to-date. It is only 6.7% below its record high of 1,565 on Oct. 9, 2007. The S&P 500's forward P/E jumped to 13.1 last week, the highest since June 2008.

(2) The Wilshire 5000 rose to a new cyclical high of 15,354, only 2.9% below its record high on Oct. 9, 2007.

(3) The S&P 400 MidCap index rose 2.2% week-over-week and 16.8% year-to-date, exceeding its previous record high on April 29, 2011. The S&P 600 SmallCap index is up 2.5% week-over-week and 17% year-to-date to a new record high.

(4) Dow Theory followers should be happy to see that the 2.2% increase in the Dow Jones industrial average was confirmed by the 2.8% increase in the Dow Jones Transportation Average.

The question is how quickly will the latest injections of performance-enhancing drugs wear off?

Source: Ed Yardeni — Ed Yardeni is the president and chief investment strategist of Yardeni Research Inc., a provider of independent investment strategy and economics research for institutional investors.